Digi International Inc (DGII)

Cash conversion cycle

		Sep 30, 2024	Jun 30, 2024	Mar 31, 2024	Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020	Dec 31, 2019
Days of inventory on hand (DOH)	days	111.84	113.96	121.42	129.95	140.96	159.59	160.51	161.24	155.44	139.26	123.99	129.49	112.92	122.22	136.35	147.42	139.12	126.78	118.01	128.59
Days of sales outstanding (DSO)	days	59.94	60.27	59.96	50.78	45.95	42.22	42.20	48.09	47.43	62.38	72.99	56.35	51.73	49.77	54.77	66.05	77.41	72.55	109.39	116.44
Number of days of payables	days	49.80	41.94	43.35	32.07	32.49	41.05	40.05	60.98	68.72	63.10	54.64	57.11	58.07	48.72	50.16	60.50	75.72	59.73	47.50	62.87
Cash conversion cycle	days	121.98	132.28	138.03	148.66	154.41	160.76	162.66	148.34	134.15	138.54	142.35	128.72	106.58	123.27	140.96	152.97	140.81	139.61	179.90	182.16

September 30, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 111.84 + 59.94 – 49.80
= 121.98

The cash conversion cycle of Digi International Inc has fluctuated over the past few quarters, ranging from 106.58 days to 182.16 days. The cash conversion cycle measures the time it takes for a company to convert its investments in inventory and other resources into cash flows from sales.

A lower cash conversion cycle is generally favorable as it indicates that the company is able to efficiently manage its working capital and generate cash flows from its operations. On the other hand, a higher cash conversion cycle may suggest inefficiencies in managing inventory, accounts receivable, and accounts payable.

Looking at the trend, we can observe that the cash conversion cycle has been volatile, with some quarters showing improvements and others showing deterioration. The company should focus on optimizing its inventory management, improving accounts receivable collection procedures, and optimizing its accounts payable terms to reduce the cash conversion cycle and enhance its working capital efficiency. The company's ability to effectively manage its cash conversion cycle will be crucial for maintaining liquidity and sustaining its financial health in the long run.